Education, Defense Spending and Economic Growth in Japan: 1868-1940. Understanding the Time Series Dynamics

Following previous causality analysis (Diebolt & Jaoul, 2004), this paper aims to study the role and the importance of military expenditures in the economic history of Japan before World War 2. We use a triple database drawn from the works of Ohkawa et al. (1957, 1974), Taeuber (1958) and Diebolt (2003). Our paper shows that military expenditures played a central role at both the economic and social levels and can be considered as one of the driving forces of the economic growth process of the country. Historical events affect first the military sector and then influence the rest of the economy and especially the education sector.